Indirect Tax Alert-September 2022

GST Calendar –Compliances for the month of October 2022

1. Vide Notification No. 18/2022-Central Tax dated 28 September 2022, CBIC has appointed 01 October, 2022 as the date on which the provision of Section 110 and section 111 of Finance Act, 2022 shall come into force.
2. Thereby increasing the time limit of the following upto 30 November, 2022-
3. Availing Input Tax Credit for the FY 21-22
4. Issuing credit notes in relation to a supply of goods or services or both shall be declared in the return for the month during which such credit note has been issued but not later than 30 November, 2022
5. Rectification of GSTR-1 & GSTR 3B 
6. This amendment brings advantage to the taxpayers for FY 21-22. Basis this, taxpayers can avail ITC, issue/report CN and rectify returns for FY 21-22 till November 30, 2022. 
7. The taxpayers can effectively avail ITC till last date of filing GSTR-3B for the month of October, i.e., November 20.
8. Tax professional needs to be extra cautious while filing any documents online- Rajasthan High Court in the matter of Shyam Sunder Girdhar Gopal vs The State of Rajasthan.
9. Background
10. The petitioner while submitting the FORM GST DRC-06 had selected “No” at the time of selection of Personal Hearing option. Moreover, it was noticed that the petitioner had suppressed some material facts before approaching the Hon’ble High Court.
11. Post submitting the FORM, an adverse assessment order was passed by the proper officer against the petitioner.
12. Aggrieved by the order, the petitioner filed a writ petition before the Hon’ble Rajasthan High Court and along with other grounds, the petitioner has mentioned that the assessment order was passed in violation of “Principles of Natural Justice”.
13. Held
14. Pursuant to the notice(s) issued to the petitioner under Section 74 of the RGST Act, reply was filed on its behalf and Form GST DRC-06 was submitted wherein, for the option of personal hearing, a conscious selection was made by the petitioner in the negative. Apparently thus, it was the explicit desire of the petitioner not to opt for personal hearing. Hence, the impugned orders cannot be branded as having been passed in breach of principles of nature justice. Having held so, apparently these writ petitions are liable to be rejected as being not maintainable.
15. In view of the above conclusion, the Hon’ble Rajasthan High Court has proposed not to delve into the issue of concealment of material facts and has assigned the petitioner to approach the appellate authority by filing appeals against the impugned orders by taking recourse of the procedure provided under Section 107 of the CGST Act.
16. The writ petitions was thus dismissed. 
17. The Taxpayers / Tax professionals should be extremely vigilant while filing/ uploading any documents on the online portal, any negligence or clerical ignorance may hamper their case.
18. No ITC on vouchers and subscription packages procured from third-party vendor- Authority of Advance Rulings, Karnataka in the matter of M/s Myntra Designs Pvt. Ltd
19. Background
20. Applicant is a major Indian e-commerce company and owns an e-commerce portal; engaged in the business of selling of fashion and lifestyle products through the portal.
21. The loyalty program is sought to be introduced with an object of increasing customer base of the applicant’s platform which will lead to increased footfall and sales through the said platform and thus the said loyalty program will directly impact and enhance the amount of commission earned by the Applicant in the course of their business.
22. In view of the above, the applicant has sought advance ruling in respect of the following question-

“Whether the applicant would be eligible to avail the input tax credit, in terms of Section 16 of the CGST Act 2017, on the vouchers and subscription packages procured by the applicant from third party vendors that are made available to the eligible customers participating in the loyalty program against the loyalty points earned / accumulated by the said customers.”

• Held
• Hon’ble Authority of Advance Rulings, Karnataka has observed that input tax credit is an entitlement to a registered person which can be taken subject to such conditions and restrictions as may be prescribed. In this regard it is seen that clause (h) of Section 17(5) prescribes that input tax credit shall not be available in respect of “goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples”. 
• Further, the loyalty program that the applicant, on the basis of a particular transaction / purchase by the customer through their e-commerce platform and subject to acceptance of the terms and conditions of the applicant by the customer, allows the customer to earn loyalty points. The applicant in the said transaction recovers the full amount from the customer and gives the loyalty points free of cost. Further the said loyalty points, in the applicants own admission, do not have any monetary value, are non-transferable and cannot be converted to cash.
• The redemption of loyalty points, admittedly involves no flow of consideration from the customer. Thus redemption of loyalty points by the customer for receiving vouchers from the applicant implies that the vouchers are issued free of cost to the customer and amounts to disposal of vouchers(goods) by way of gift and squarely covered under clause (h) of Section 17(5) of the Act.
• The Hon’ble Authority of Advance Rulings, Karnataka, has held that the applicant is not eligible to avail the input tax credit, in terms of Section 16 of the CGST Act 2017, on the vouchers and subscription packages procured by the applicant from third party vendors that are made available to the eligible customers participating in the loyalty program against the loyalty points earned / accumulated by the said customers, as the input tax credit is not available in terms of Section 17(5)(h) of the CGST Act 2017.